In MacDonald v. MacDonald 2025 ABKB 72 Justice Lema considered several important issues that often present themselves in family law cases.
The first question posed was whether post-separation Mr. MacDonald was obliged to pay child and spousal support during the three-year period his salary, dividends, and share sale proceeds were deposited into the parties’ joint account, with equal access to both parties.
Ms. MacDonald sought child support for their four children and spousal support, despite her husband’s entire income and some capital being deposited to their joint account, an account which she accessed with no restrictions.
The court determined that no child or spousal support for this period of time was payable, particularly because the children’s mother did not proffer any evidence that the children’s needs were not met; that she had not needed to use any of her own financial resources; and she agreed with various payments that came out of the joint account to reduce family debt. She also did not suggest that her husband’s personal use draws were excessive.
The court reviewed the expenses of each party and the children and the payment of family debt, noting that the father’s personal expenses were modest in comparison to the family expenses and debts paid. The court relied on four authorities: Jones v. Jones, 2017 SKCA 46; MAV v. JV 2023 BCSC 1904; KSH v. SFF 2022 BCSC 661; and KAF v. JLF 2017 ONSC 4279.
The second issue before the court was whether income should be imputed to Mr. MacDonald for the 17-month period he was not employed after “being fired from his employment for refusing to take a drug test”. The court reviewed the law on unemployment or under-employment pursuant to section 19 (1) of the Child Support Guidelines and identified the following principles:
a) A party may be imputed income on the basis of deliberate under-employment or unemployment if they engage in reckless behavior which affects their income earning capacity. Rogers v. Rogers 2013 ONSC 1997.
- When a party experiences an involuntary loss of employment, they may be given a “grace period” to investigate options and seek out employment in their field at a comparable remuneration before income will be imputed to them. Lavrinenko v. Lavrinenko 2014 ONSC 4097.
- Even if it is determined that the payor parent is deliberately unemployed or under-employed, the court has discretion to decide whether income will be imputed, based on the court’s assessment of the reasonableness of the payor’s decision and their actions in relation to their income. Rilli v. Rilli 2006 ONCA 34451
- In determining the amount of income to impute the court must consider what is reasonable in the circumstances of the particular case, including age, education, experience, skills, health and past earning history. West v. West 2001 ONSC 28216.
Mr. MacDonald’s situation arose in his work as a health and safety manager for a construction company. As he left the workplace one day, an inspector with a “drug dog” asked him if he would consent to an inspection of his vehicle, to which he assented. The dog detected contraband in the pocket of a jacket that had been stowed in his vehicle, a coat he had not worn for some months. There was residue of marijuana which sparked a demand that he provide an on-site alcohol and drug test, which he initially resisted but eventually agreed to provide.
A week later the results showed non-compliance with the worksite protocol for alcohol and drugs and he was dismissed for cause, namely, “irreputable damage to the employer’s reputation”.
The court found that the event was a one-time situation as he never failed any other workplace drug or alcohol screening tests and there was no evidence that his work performance, behavior, or conduct raised any substance abuse concerns. He readily agreed that his car could be inspected and also agreed to drug testing, despite his initial reluctance. The court held that it was an isolated error in judgment albeit with a severe consequence and cited Justice Pazaratz in Rogers v. Rogers, supra, where in a similar case he found that it arose through “mix-up, honest mistake, bad luck, or even isolated error in judgment”.
As a result, the court declined to find that his dismissal was deliberate and reckless and also refused to impute income from the date of his firing, allowing a grace period of three months, acknowledging that he had courted a small risk in presenting as he did to the worksite that day. He had worked for the company for 8 years, was in management, and owned shares in the company.
To determine the sum to be imputed for the balance of the period of unemployment the court considered his previous income and dividends which amounted to an average of $225,000 per annum. After examining detailed financial information, the court imputed income for the period based on his financial position consisting of RRSP withdrawals, employment insurance, monies provided to him by family members, and deposits to his account that he could not explain.
The court found that unemployment for 15 months was unreasonable and noted that he provided no documents to support his oral evidence that he sent out over 100 resumes, neither could he identify the timing of these overtures.
The third issue before the court was whether Ms. MacDonald should be reimbursed by her husband for home mortgage payments made by her that reduced the mortgage from $265,768 to $142,061, during the period between December 2015 and September 2024, an amount of $123,707, half of which, if allowed, required a reimbursement payment to her of $61,853.
However, the court found that some of the mortgage payments came out of funds originally sourced by her husband out of his 2015 and 2016 dividends. The court also held that had she wanted to, she could have suggested that the parties sell the home or rent it to third parties, instead she continued to live in the home, a scenario in which she attached no value to the benefit of her remaining in the family home.
The court cited Bos v. Bos 2007 ABQB 604 where the court held that where one party paid the mortgage and property taxes and had the benefit of living in the home, it was just and equitable that the increase in value of the home be divided equally, accepting Ms. Bos’ argument that the amount of mortgage payments made during the separation period was off-set by the value her husband received by living in the home, while she paid rent. Further, in Wesse v. Knight 2014 ABQB 671, the court found that the payment of taxes, mortgages and insurance was roughly equivalent to what the non-resident party paid for rental accommodation and was “a wash”.
While these issues required complex and extensive financial evidence, the parties managed to organize their material and make submissions in a two-day hearing, a feat that is rarely accomplished in today’s family law litigation.
**This article was first published by LAW360, a publication of Lexis Nexis Canada.